Weekly Feed Market Commentary
Published 15 October 14
Provisional figures for the 2014 UK wheat and barley crops were released by Defra last week (9 Oct) and indicated the biggest UK wheat crop since 2008 at 16.6Mt, up 39% on last year’s level. UK barley output is only marginally (0.1Mt), lower than last year’s volume at 7.0Mt, and is still above the previous 5-year average.
Defra’s production figures fed into the first indications of UK wheat and barley supply and demand for the 2014/15 marketing season in the AHDB/HGCA Early Balance Sheets, released on Monday (13 Oct). For wheat, despite lower imports and increased domestic consumption, the higher supplies point to a large surplus, meaning a strong export programme will be required to prevent a large carry-over of stocks into the next season. For barley, total availability is estimated to be 319Kt higher than last year, at 8.5Mt due to larger production.
Total animal feed demand for cereals is estimated to be lower than in 2013/14, based on the assumption of ‘normal’ weather conditions, the removal of last year’s supporting factor of higher milk prices and ample forage availability. However, the proportion of wheat used in animal feed expected to be higher because of its more competitive price against other feed grains.
The October release of the USDA’s world supply and demand estimates were also released last week (10 Oct). There were noticeable increases to production for both EU wheat (3.0Mt up on the September forecast) and maize (2.7Mt up on the September forecast), which added to the downward sentiment in the EU grain market. However, from a world perspective, the USDA numbers for wheat painted a less bearish picture than has been the norm for recent months. Global wheat closing stocks were forecast 3.8Mt lower than last month’s estimate due to increased demand forecasts.
Despite falling ahead of Friday’s USDA report international wheat prices are little changed from last Tuesday, supported in the last few days by the scaled back global ending stock forecasts and a slightly weaker US dollar. UK feed wheat futures prices (Nov-14) settled at £114.95/t on Tuesday (14 Oct), up £2.20/t on Friday’s (10 Oct) close but only £0.45/t higher than last Tuesday.
Global soyabean estimates saw little in the way of change in the October USDA world supply and demand estimates. World soybean production was revised higher by 0.1Mt due to a slight increase to US yield levels. However, because of a reduction in the world soyabean demand forecasts, the overall effect was a 0.5Mt increase to the global end-season stock forecast.
Oilseed prices found support at the beginning of last week, resulting from concerns of dry weather in some parts Brazil impacting on newly planted crops. However, prices drifted lower through the rest of the week, partly as a result of the increased global production forecasts, and are now lower than a week ago.
Paris rapeseed futures (Nov-14) declined by €7.25/t over the past week to close at €323.50/t on Tuesday (14 Oct). Rapemeal (34%, ex-mill, Erith, October delivery) was reported at £158.00/t on Friday (10 Oct), down £1.00/t on the previous week. The Hi-Pro soyameal price (ex-store, East Coast, October delivery was unchanged again on Friday, at £318.00/t.
Figures and commentary provided in association with HGCA and BPEX.
For further information on the cereals market click here to link through to HGCA website.